exane bnp paribas 16th european ceo seminar784284d6-fcf6-4b15...jun 20, 2014 · exane bnp paribas...
TRANSCRIPT
Exane BNP Paribas 16th European CEO Seminar Michel M. Liès, Group CEO Paris, 20 June 2014
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Introduction to Swiss Re
2
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
• Swiss Re is a global operator, with over 60 offices in more than 20 countries
• Swiss Re has both a superior capital rating1 and 150 years of experience in providing reinsurance solutions for our clients
• This track record provides Swiss Re with preferential access to long tail business, such as Casualty
• Swiss Re has paid a dividend every year since 1869 (date of first listing)
Differentiated through history
Swiss Re's charter of foundation, 1863
1 S&P: AA-, stable outlook; Moody's: Aa3, stable outlook; AM Best A+, stable outlook. Ratings as at 31 January 2014
3
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Swiss Re Group Overview
Reinsurance
To be a focused, lean, global player in large commercial business
To be a recognised force in the closed life book market
To be the world's leading reinsurer
The foundation of our strengths
A key opportunity for growth
Providing cash dividends
Corporate Solutions
Swiss Re Group
Admin Re®
Current position
Strategic goal
Current position
Strategic goal
Current position
Strategic goal
P&C L&H
4
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Swiss Re is broadly diversified by geography and product line
Net premiums earned1 2013 (USD 28.8 bn)
… and by business segment:
Swiss Re benefits from geographic and business mix diversification and has the ability to reallocate capital to achieve profitable growth
Europe Asia (incl. Middle East /Africa)
39% 21%
1 Includes fee income from policyholders
11.5 11.3 6.0
by region (in USD bn)
Americas
40%
P&C Re 50%
L&H Re 35%
Corporate Solutions
10%
Admin Re® 5%
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Swiss Re's strength in underwriting P&C premium and underwriting profit comparison
6
Underwriting profit = GAAP premiums earned - claims and claims adjustment expenses - acquisition costs - other expenses Top 8 reinsurers include: Swiss Re, Munich Re, Hannover Re, PartnerRe, SCOR, General Re, Everest Re, Transatlantic Re/Alleghany Source: Swiss Re Economic Research and Consulting
Average premium share of 23%
Average profit share of 42%
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013
Premiums U/W profit (red = loss)
Swiss Re’s P&C premium and underwriting profit share vs top reinsurers
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Natural catastrophe protection gap
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Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Large protection gap between insured and economic natural catastrophe losses world-wide
8
Catastrophe related losses
Note: Insured losses plus uninsured losses = total or economic losses Source: Swiss Re's sigma catastrophe database
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
50
100
150
200
250
300
350
400
450
2005 2006 2007 2008 2009 2010 2011 2012 2013E
Insured losses Uninsured losses Uninsured losses % of total losses
in USD billion, at 2013 prices
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Increase in largest industry loss scenarios per region
Demand for nat cat insurance expected to increase on average by approx. 50% in mature markets and 100% in HGM by 2020
Demand for natural catastrophe capacity will continue to increase
9
2012 vs. 2020E EQ: Earthquake (500 yrs) TC/WS: Tropical Cyclones/Winter Storms (100 yrs); TC includes storm surge FL: River Flood (250 yrs)
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Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Large mortality protection gap
10 10 Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
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The mortality protection gap Life insurance opportunities for closing
Asia – Pacific: Mortality protection gap per working person with dependents:
USDk
0
100
200
Pro
tect
ion
need
ed
Income to maintain living standard
Mortality protection gap
Pro
tect
ion
in p
lace
Net financial assets / savings
Relevant life insurance
11
Source: Swiss Re
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First quarter 2014 results
Extract from Q1 2014 results presentation
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Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
• Group net income USD 1.2bn – Return on equity 14.9%, earnings per share USD 3.58 (CHF 3.20)
– Strong investment performance, return on investments 3.7%
• Reinsurance net income USD 1.1bn – Strong underwriting performance in P&C continues
– Good L&H operating margin, net income impacted by net realised losses
• Corporate Solutions grows profitably, net premiums earned +35.4%
• Admin Re® with exceptional gross cash generation USD 202m
• Book value per common share USD 99.13 (CHF 87.56) – Swiss Re Group SST ratio 241%1
13
Q1 2014 Financial highlights Strong Group performance
1 SST 1/2014 as filed with FINMA at the end of April 2014, consolidated Group view
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Key figures Q1 2014
14
1 Return on investments calculation for 2014 excludes foreign exchange related net realised gains/losses and collateral balances 2 Excluding contingent capital instruments (USD 1 102m, of which USD 352m in P&C Re, USD 750m in L&H Re); basis for ROE and BVPS calculations
Total Q1 2014
Total FY 2013
• Common shareholders' equity2 14 064 5 951 2 567 6 148 5 233 33 919 31 850
of which unrealised gains 624 713 101 951 58 2 447 1 616
• Book value per common share (USD) 99.13 93.08
(CHF) 87.56 82.76
USD m, unless otherwise stated P&C Re L&H Re Corporate Solutions
Admin Re®
Group items
Total Q1 2014
Total Q1 2013
• Premiums earned and fee income 3 813 2 672 830 236 - 7 551 6 782
• Net income/loss 1 003 51 80 48 44 1 226 1 380
• Return on investments1 3.6% 2.8% 3.7% 4.9% 3.3% 3.7% 3.4%
• Return on equity 29.8% 3.6% 12.0% 3.2% 3.5% 14.9% 16.6%
• Combined ratio 78.8% - 95.2% - -
• Operating margin - 9.6% - - -
• Earnings per share (USD) 3.58 4.02
(CHF) 3.20 3.72
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Net income
USD m
Net premiums earned USD m
1 009 1 003 3 534 3 813
+7.9%
ROE: 29.8%
78.8%
69.7%
+9.1%pts -0.6%
Q1 2013 Q1 2014
• Net impact from large nat cats in Q1 2014 was 0.9%pts (8.9%pts below expected)
• Q1 2014 benefited by 5.7%pts from prior year net reserve releases; Q1 2013: 8.2%pts
• Adjusting for expected nat cats and reserve development, CR is 93.4%
15
P&C Reinsurance Robust underwriting and increased investment result
Q1 2013 Q1 2014
• Increase in premiums earned mainly driven by the expiry of a quota share agreement in 2012 and large Asian transactions written at the end of 2013, partially offset by the non-renewal of a large European deal
• Gross premiums written decreased by 0.9%
Q1 2013 Q1 2014
• Both periods benefited from a benign nat cat season
• Continued reserve releases, but at a lower level than in Q1 2013
• Return on investments 3.6% driven by realised gains from the active management of the listed equity portfolio
Combined ratio
%
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Net income
USD m
L&H Reinsurance Strong new business growth, good operating margin
222
51
2 643 3 086
Operating margin1
% +16.8% -4.0%pts
9.6%
13.6%
1 Operating margin is calculated as operating income divided by total operating revenues
ROE: 3.6%
Q1 2013 Q1 2014
• Premiums earned and fee income increased by 15.5%
• Increase driven by recaptured Life business, Health business in Asia, and a large longevity transaction in the UK
• Higher investment result due to asset re-balancing in 2013. Running yield 3.8%; Q1 2013: 3.2%
16
Q1 2013 Q1 2014
• Net realised losses of USD 100m largely due to a non-economic loss on an interest rate hedge; net realised gains in Q1 2013 were USD 111m
• Positive impact from higher investment income and lower interest charges following 2013 capital structure optimisation
-77.0%
Operating revenues USD m
Q1 2013 Q1 2014
• Operating margin of 9.6% demonstrates improvement in the underlying business
• Excluding YRT recapture, operating margin for both periods is stable
• Mortality and morbidity experience was better than expected, particularly in the US and Canada
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101
80
Net income
USD m
613
830
95.2%
87.6%
ROE: 12.0%
+35.4% +7.6%pts -20.8%
Q1 2013 Q1 2014
• No impact from nat cat events, 3.6%pts below expected
• Unfavourable reserve development of USD 17m, impacting CR by 2.0%pts
• Adjusting for expected nat cats and reserve development, CR is 96.8%
17
Corporate Solutions Profitable organic growth continues
Q1 2013 Q1 2014
• Increase in net premiums earned mainly driven by successful organic growth across most lines of business and expiry of a quota share agreement in 2012
• Gross premiums written net of internal fronting for BU Reinsurance increased by 28.9% to USD 0.8bn in Q1 2014
• The exceptional growth includes a large one-off transaction
Q1 2013 Q1 2014
• Realised insurance derivative gains on weather and nat cat business USD 18m; Q1 2013: USD 20m
• ROI 3.7%, mainly driven by realised gains from active management of listed equity portfolio; Q1 2013: 3.2%
• Dividends of USD 300m in Q1 2014
Net premiums earned USD m
Combined ratio
%
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63
202
78
48
Net income
USD m +0.2%pts
1 Gross cash generation (GCG) is the change in excess capital over and above the target capital position
ROE: 3.2%
-38.5% +220.6%
18
4.7% 4.9%
Q1 2013 Q1 2014
• Return on investments of 4.9% primarily driven by net investment income from corporate and government bonds
• Q1 2014 net realised gains of USD 54m; Q1 2013: USD 52m
• Running yield on fixed income portfolio 4.3%; Q1 2013: 4.1%
Q1 2013 Q1 2014
• Q1 2014 net income supported by realised gains, partly offset by higher than expected tax
• Q1 2013 benefited from exceptionally high income from unit-linked business and very low tax
• External credit facility (GBP 550m) established to increase leverage and lower weighted average cost of capital
Admin Re® Cash generation helped by positive prior year effect
Q1 2013
Q1 2014
• Solid underlying gross cash generation in Q1 2014
• Positive impact of USD 142m following finalisation of 2013 UK statutory results
Return on investments
%
Gross cash generation1
USD m
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0.6%
7.8% 3.4%
3.7%
118.2 114.9
Return on investments2
% +0.3%pts -2.8%
Group investment result Consistent and strong performance
19
Total return2
% +7.2%pts
Q1 2013 Q1 2014
• Decrease in average invested assets driven by rising interest rates since Q1 2013
• Net reduction in equity exposure of USD 2.5bn in Q1 2014
• Short duration position in effect as of Q1 2014: DV01 of USD -7.5m
1 Average invested assets excludes cash management activity; 2014 also excludes collateral balances 2 2013 includes foreign exchange related net realised gains/losses, which are excluded from the return on investments and total return scope in 2014
Q1 2013
Q1 2014
• ROI of 3.7% for Q1 2014 driven by net investment income and realised gains from the sale of listed equities
• Net realised gains of USD 234m for Q1 2014; Q1 2013: USD 255m
• Impairments of USD 5m in Q1 2014; Q1 2013: USD 12m
Q1 2013
Q1 2014
• Total return for Q1 2014 impacted by mark-to-market gains driven by lower interest rates
• Group fixed income running yield at 3.4%; Q4 2013: 3.3%; Q1 2013: 3.0%
Average invested assets1
USD bn, basis for ROI calculation
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Summary and outlook
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• Keep growing regular dividends and profitable business
• Redeploy additional USD 3bn of excess capital @11% ROE by 2015
• 2011-15 financial targets remain our top priority
Performance and capital management
• Maintain industry leading underwriting track record
• Productivity emphasis to control management expenses
• Continue to re-direct capital and talent to High Growth Markets Group strategy
• L&H Re: deliver on fixing pre-2004 US issues, grow new business, demonstrate progress towards 2015 ROE target of 10-12%
• Admin Re®: continue operational transformation, selective UK growth to enhance UK franchise
Perform in L&H
Priorities for the Group CEO in 2014 Focus on strategy execution
21
Outperform our peers in P&C
• P&C Re: strict focus on risk selection and portfolio management; differentiate through knowledge, expertise and services
• Corporate Solutions: deliver on our commitment of continuing profitable growth, with particular focus on High Growth Markets
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
YTD 2014 renewals (January – April)
Treaty portfolio volume
Up for renewalYTD 2014
Estimatedoutcome
USD 11.2bn USD 11.2bn
• Successful April renewals in a challenging environment; wrote attractive new Casualty business in the US
• YTD risk adjusted price quality2 remains at 107%
22
P&C Reinsurance: 2014 renewals Overall price quality remains at an attractive level
January 2014 treaty renewals1
Up for renewal1 Jan 2014
Estimatedoutcome
Up for renewal1 April 2014
Estimatedoutcome
April 2014 treaty renewals
1 January 2014 numbers have been restated with current fx rates 2 Swiss Re's risk adjusted price quality provides an economic view on price quality, ie includes rate and exposure changes, claims inflation and interest rates
USD 9.8bn USD 9.6bn
USD 1.4bn USD 1.6bn
-2%
+14%
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89.7 87.8
105.2
123.1
2010 2011 2012 2013 … 2015E
6.6 7.7
11.9 13.0
3.6
9.7
2010 2011 2012 2013 Q12014
… 2015E
Group financial targets On track
in USD2
ROE 700 bps above risk free average over 5 years (2011-2015)
3
7.3 8.0
3
= reported EPS
= EPS @10% avg. annual growth (base: 2010), adjusted for special dividends1
EPS growth 10% average annual growth rate, adjusted for special dividends1
8.4
1 EPS CAGR of 10% has been adjusted to 5% for 2014 to account for the distribution of excess capital through the special dividend of USD 1.6bn in April 2014. Methodology is in line with the approach taken for the special dividend of USD 1.5bn paid in April 2013
2 Assumes constant foreign exchange rate 3 Excl. CPCI 4 Cumulative dividends included in ENW per share were translated from CHF to USD using the fx rate of the dividend payment date; dividends included for 2011: USD
3.1 (CHF 2.75), 2012: USD 6.4 (CHF 3.00, or USD 3.3, in addition to the 2011 dividend), 2013: USD 14.5 (CHF 7.50, or USD 8.05, in addition to the 2011 and 2012 dividends)
23
9.2 9.6
13.4 13.7 14.9
2010 2011 2012 2013 Q12014
… avg.2011-2015E
in %
= reported ROE
= 700 bps above US Gov 5 years
8.5 7.8 8.2
= reported ENWPS including cumulative dividends in USD4
144.5
= ENWPS @ 10% avg. annual growth (base: 2010)
ENW per share growth plus dividends 10% avg. annual growth rate over 5 years
in USD2
8.6
2.2
98.7 108.5
119.4
Delivering the 2011-2015 financial targets remains Swiss Re's top priority
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Appendix
Extract from Q1 2014 results presentation
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USD m Re-
insurance P&C Re L&H Re Corporate Solutions
Admin Re®
Group items
Consoli-dation
Total Q1 2014
Total Q1 2013
Revenues Premiums earned 6 472 3 813 2 659 830 126 - - 7 428 6 617 Fee income from policyholders 13 - 13 - 110 - - 123 165 Net investment income/loss – non participating 639 225 414 21 312 39 -4 1 007 941 Net realised investment gains/losses – non participating 163
233
-70
63
51
8 -
285 208
Net investment result – unit-linked and with-profit -54 - -54 - 153 - - 99 2 133 Other revenues 12 12 - - - 78 -88 2 5 Total revenues 7 245 4 283 2 962 914 752 125 -92 8 944 10 069 Expenses Claims and claim adjustment expenses -1 923 -1 923 - -531 - -2 - -2 456 -1 808 Life and health benefits -2 130 - -2 130 - -338 - - -2 468 -2 127 Return credited to policyholders 46 - 46 - -198 - - -152 -2 139 Acquisition costs -1 213 -764 -449 -101 -45 - - -1 359 -1 057 Other expenses -547 -317 -230 -158 -87 -72 78 -786 -817 Interest expenses -185 -62 -123 - -12 -5 14 -188 -188 Total expenses -5 952 -3 066 -2 886 -790 -680 -79 92 -7 409 -8 136 Income/loss before income tax expenses 1 293 1 217 76 124 72 46 - 1 535 1 933 Income tax expense/benefit -221 -208 -13 -44 -24 -2 - -291 -535 Net income/loss before attribution of non-controlling interests 1 072
1 009
63
80
48
44 -
1 244 1 398
Income attributable to non-controlling interests - 1
-1
-
-
-
- -
-1 - Net income/loss after attribution of non-controlling interests 1 071
1 008
63
80
48
44 -
1 243 1 398
Interest on contingent capital instruments -17 -5 -12 - - - - -17 -18 Net income/loss attributable to common shareholders 1 054
1 003
51
80
48
44 -
1 226 1 380
Business segment results Q1 2014 Income statement
25
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31 March 2014, USD m Re-
insurance P&C Re L&H Re Corporate Solutions
Admin Re®
Group items
Consoli-dation
End Q1 2014
End FY 2013
Assets
Fixed income securities 56 908 26 665 30 243 4 753 20 247 66 - 81 974 79 296 Equity securities 3 042 2 661 381 793 - 1 089 - 4 924 7 691 Other investments 17 425 13 982 3 443 151 1 923 5 785 -6 608 18 676 14 884 Short-term investments 17 169 12 235 4 934 1 824 1 197 261 - 20 451 20 989 Investments for unit-linked and with-profit business 910 - 910 - 26 072 - - 26 982 27 215 Cash and cash equivalents 7 330 6 406 924 608 2 005 401 - 10 344 8 072 Deferred acquisition costs 4 861 1 992 2 869 305 1 - - 5 167 4 756 Acquired present value of future profits 1 429 - 1 429 - 2 058 - - 3 487 3 537 Reinsurance recoverable 6 246 4 496 1 750 8 039 310 - -6 601 7 994 8 327 Other reinsurance assets 23 433 13 936 9 497 2 414 3 556 4 -1 777 27 630 24 676 Goodwill 4 092 2 057 2 035 17 - - - 4 109 4 109 Other 14 297 10 043 4 254 1 001 1 056 733 -5 789 11 298 9 968 Total assets 157 142 94 473 62 669 19 905 58 425 8 339 -20 775 223 036 213 520
Liabilities Unpaid claims and claim adjustments expenses 55 151 44 962 10 189 11 624 1 201 12 -6 607 61 381 61 484 Liabilities for life and health policy benefits 17 287 - 17 287 235 18 316 - - 35 838 36 033 Policyholder account balances 1 515 - 1 515 - 29 481 - - 30 996 31 177 Other reinsurance liabilities 16 886 14 507 2 379 4 198 557 7 -2 241 19 407 16 255 Short-term debt 4 520 789 3 731 - 650 998 -2 645 3 523 3 818 Long-term debt 15 405 4 753 10 652 - - - -615 14 790 14 722 Other 25 244 15 029 10 215 1 272 2 072 2 089 -8 623 22 054 17 054 Total liabilities 136 008 80 040 55 968 17 329 52 277 3 106 -20 731 187 989 180 543
Shareholders' equity 21 117 14 416 6 701 2 567 6 148 5 233 -44 35 021 32 952 thereof contingent capital instruments 1 102 352 750 - - - - 1 102 1 102
Non-controlling interests 17 17 - 9 - - - 26 25 Total equity 21 134 14 433 6 701 2 576 6 148 5 233 -44 35 047 32 977 Total liabilities and equity 157 142 94 473 62 669 19 905 58 425 8 339 -20 775 223 036 213 520
Business segment results Q1 2014 Balance sheet
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1 Total is after consolidation 2 Excluding contingent capital instruments (USD 1 102m, of which USD 352m in P&C Re, USD 750m in L&H Re); basis for ROE and BVPS calculations 3 Based on published net income attributable to common shareholders
USD m Re-
insurance P&C Re L&H Re Corporate Solutions
Admin Re®
Group items
Total1
Q1 2014
Common shareholders' equity2 at 31 December 2013 18 384 12 904 5 480 2 771 5 804 4 932 31 850
Net income attributable to common shareholders 1 054 1 003 51 80 48 44 1 226
Dividends - - - -300 - 300 -
Other (incl. fx) - -8 8 12 25 -22 12
Net change in unrealised gains/losses 577 165 412 4 271 -21 831
Common shareholders' equity at 31 March 2014 20 015 14 064 5 951 2 567 6 148 5 233 33 919 Contingent capital instruments 1 102 352 750 - - - 1 102 Shareholders' equity at 31 March 2014 21 117 14 416 6 701 2 567 6 148 5 233 35 021
Non-controlling interests 17 17 - 9 - - 26
Total equity at 31 March 2014 21 134 14 433 6 701 2 576 6 148 5 233 35 047
ROE calculation USD m
Re-
insurance
P&C Re L&H Re Corporate Solutions
Admin
Re® Group items
Total1 Q1 2014
Net income/loss attributable to common shareholders 1 054 1 003 51 80 48 44 1 226
Opening common shareholders' equity 18 384 12 904 5 480 2 771 5 804 4 932 31 850
Average common shareholders' equity 19 200 13 484 5 716 2 669 5 976 5 083 32 885
ROE, annualised3 22.0% 29.8% 3.6% 12.0% 3.2% 3.5% 14.9%
27
Shareholders' equity and ROE Q1 2014
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USD bn End
Q1 2014
Balance sheet values 163.3
Unit-linked investments -24.3
With-profit business -3.5 Assets for own account (on balance sheet only) 135.5
1 Includes cat bonds and loans 2 Comprised of listed equities, hedge funds – equities, private equity and includes Principal Investments 3 Includes alternative investments such as hedge funds – non equities and real estate, derivatives and other investments
USD bn P&C Re L&H Re Corporate Solutions
Admin Re®
Group items
Consoli-dation
End Q1 2014
End FY 2013
Cash and cash equivalents 6.4 0.9 0.6 1.2 0.4 - 9.5 7.2 Short-term investments 12.2 4.9 1.8 1.2 0.4 - 20.5 21.0 Government bonds 18.1 15.8 2.5 6.9 - - 43.3 41.0 Corporate bonds 6.0 11.9 1.7 12.6 - - 32.2 31.6 Securitised products1 2.6 2.5 0.5 0.8 - - 6.4 6.7 Equities2 4.6 0.8 0.8 - 2.3 - 8.5 10.8 Mortgages and other loans 1.5 1.2 - 1.4 2.0 -3.3 2.8 2.6 Policy loans - 0.1 - 0.2 - - 0.3 0.3 Other – investment related3 10.5 1.8 0.1 - 2.2 -0.9 13.7 9.9 Other – insurance related - - 0.1 0.2 0.4 -2.4 -1.7 -1.0 Total 61.9 39.9 8.1 24.5 7.7 -6.6 135.5 130.1
28
Overall investment portfolio 54% invested in cash, short-term investments or government bonds
Cash and cash
equivalents 7%
Short-term investments
15%
Government bonds incl.
Agency 32%
Corporate bonds 24%
Securitised products
5%
Equities 6%
Mortgages and other
loans 2%
Other 9%
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014 29
Group capitalisation Swiss Solvency Test1 (SST)
1 SST is a legally binding solvency measure. SST risk-bearing capital is based on the preceding year-end capital position (minus projected dividends). SST target capital reflects a 12-month forward looking view; SST 1/2014 as filed with FINMA at the end of April 2014, consolidated Group view; impact of October 2013 CHF 175m subordinated contingent write-off securities not reflected in SST 1/2014
Group solvency remains very strong
40.5 38.5 40.7 48.7 52.2 15.0 18.5 19.1 19.8 21.6
269%
208% 213%
245% 241%
0%
50%
100%
150%
200%
250%
300%
0
10
20
30
40
50
60
70
SST 1/2010 1/2011 1/2012 1/2013 1/2014
SST risk-bearingcapital
SST target capital SST ratio
USD bn; %
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
17.5
27.6 30.7 29.0 33.9
37.2 5.2
5.5 5.4
3.6
5.4 6.5
16.3
16.4 16.3
10.7
9.5 7.0 12.7
13.8 13.6
11.3 8.5 6.7
56% 48%
45% 40%
31% 24%
23%
17% 15% 11% 14% 15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013
Core capital Total hybrid incl. contingent capitalSenior debt LOCSenior leverage plus LOC ratio Subordinated leverage ratio
USD bn
• Significant deleveraging of senior debt and LOCs in the course of 2013 • Well on track towards implementation of target capital structure
4 5
1
2 3
Senior leverage plus LOC ratio target range: 15-25%
Subordinated leverage ratio target range: 15-20%
1 Core capital of Swiss Re Group is defined as economic net worth (ENW) 4 Senior debt plus LOCs divided by total capital 2 Senior debt excluding non-recourse positions 5 Subordinated debt divided by sum of subordinated debt and ENW 3 Unsecured LOC capacity of Swiss Re Group (usage is lower) Note: 2009 and prior have been translated from CHF using respective year end fx rates
30
Swiss Re's capital structure Leverage ratios within target range
Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Investor Relations contacts Hotline E-mail +41 43 285 4444 [email protected] Eric Schuh Ross Walker Chris Menth +41 43 285 4708 +41 43 285 2243 +41 43 285 3878
Simone Lieberherr Simone Fessler +41 43 285 4190 +41 43 285 7299
Corporate calendar & contacts
Corporate calendar 3 July 2014 Investors' Day London 6 August 2014 Second Quarter 2014 results Conference call 7 November 2014 Third Quarter 2014 results Conference call 19 February 2015 Annual Results Conference call
31
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Exane BNP Paribas | 16th European CEO Seminar | Paris, 20 June 2014
Cautionary note on forward-looking statements
Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans objectives, targets and trends) and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact. Forward-looking statements typically are identified by words or phrases such as “anticipate“, “assume“, “believe“, “continue“, “estimate“, “expect“, “foresee“, “intend“, “may increase“ and “may fluctuate“ and similar expressions or by future or conditional verbs such as “will“, “should“, “would“ and “could“. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Swiss Re’s actual results of operations, financial condition, solvency ratios, liquidity position or prospects to be materially different from any future results of operations, financial condition, solvency ratios, liquidity position or prospects expressed or implied by such statements or cause Swiss Re to not achieve its published targets. Such factors include, among others: • further instability affecting the global financial system and developments related
thereto; • deterioration in global economic conditions; • Swiss Re’s ability to maintain sufficient liquidity and access to capital markets,
including sufficient liquidity to cover potential recapture of reinsurance agreements, early calls of debt or debt-like arrangements and collateral calls due to actual or perceived deterioration of Swiss Re’s financial strength or otherwise;
• the effect of market conditions, including the global equity and credit markets, and the level and volatility of equity prices, interest rates, credit spreads, currency values and other market indices, on Swiss Re’s investment assets;
• changes in Swiss Re’s investment result as a result of changes in its investment policy or the changed composition of its investment assets, and the impact of the timing of any such changes relative to changes in market conditions;
• uncertainties in valuing credit default swaps and other credit-related instruments; • possible inability to realise amounts on sales of securities on Swiss Re’s balance
sheet equivalent to their mark-to-market values recorded for accounting purposes; • the outcome of tax audits, the ability to realise tax loss carryforwards and the
ability to realise deferred tax assets (including by reason of the mix of earnings in a jurisdiction or deemed change of control), which could negatively impact future earnings;
• the possibility that Swiss Re’s hedging arrangements may not be effective; • the lowering or loss of one of the financial strength or other ratings of one or more
Swiss Re companies, and developments adversely affecting Swiss Re’s ability to achieve improved ratings;
• the cyclicality of the reinsurance industry; • uncertainties in estimating reserves; • uncertainties in estimating future claims for purposes of financial reporting,
particularly with respect to large natural catastrophes, as significant uncertainties may be involved in estimating losses from such events and preliminary estimates may be subject to change as new information becomes available;
• the frequency, severity and development of insured claim events; • acts of terrorism and acts of war; • mortality, morbidity and longevity experience; • policy renewal and lapse rates; • extraordinary events affecting Swiss Re’s clients and other counterparties,
such as bankruptcies, liquidations and other credit-related events; • current, pending and future legislation and regulation affecting Swiss Re or its
ceding companies, and the interpretation of legislation or regulations by regulators;
• legal actions or regulatory investigations or actions, including those in respect of industry requirements or business conduct rules of general applicability;
• changes in accounting standards; • significant investments, acquisitions or dispositions, and any delays,
unexpected costs or other issues experienced in connection with any such transactions;
• changing levels of competition; and • operational factors, including the efficacy of risk management and other
internal procedures in managing the foregoing risks.
These factors are not exhaustive. Swiss Re operates in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. Swiss Re undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. This communication is not intended to be a recommendation to buy, sell or hold securities and does not constitute an offer for the sale of, or the solicitation of an offer to buy, securities in any jurisdiction, including the United States. Any such offer will only be made by means of a prospectus or offering memorandum, and in compliance with applicable securities laws.
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